Green Room

How we became a net petroleum exporter again

This one will probably come as a surprise to many of you. Despite the best (read: worst) efforts of the Obama administration and the counter-intuitive nature of what you’re paying for gas and heating bills this winter, the United States is on track to be a net exporter of petroleum products for the first time in more than half a century.

The U.S. exported more oil-based fuels than it imported in the first nine months of this year, making it likely that 2011 will be the first time since 1949 that the nation is a net exporter of such goods, primarily diesel.

That’s not all. The U.S. has reversed another decades-long trend. It began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006.

“It’s dramatic. It’s transformative,” Edward Morse, a former senior U.S. energy official who now directs global commodities research at Citigroup, says of the historic shifts. He says the U.S. is importing a smaller share — 49% in 2010, down from 60% in 2005 — of the oil it uses, adding: “We’re moving toward energy independence.”

Before we start jumping for joy here, it’s important to note that these figures include all exports of any petroleum based products, not just what we drill here at home. Two factors accounted for the lion’s share of this shift, and one of them is the increasing quantity of oil sands based products which we import from Canada and refine. Large amounts of that, particularly diesel, are then resold and exported.

The second factor is the boom we’ve seen in seen in the extraction of oil (along with natural gas) in shale deposits, particularly in North Dakota, Montana and Texas. Additional strain on domestic supplies has been relieved by the falling price of natural gas as we open up more supplies in Pennsylvania, Ohio and elsewhere. A number of manufacturing interests, such as steel production, have been increasingly turning to natural gas to cut production costs, making their products more competitive and lowering demand for crude oil products.

Crude oil production is still far below where it could be, given the stingy nature of the Obama administration when it comes to drilling permits and oil lease auctions, but even that has been on the rise. The industry has managed to fight its way back to a great degree, producing jobs and reducing our dependence on foreign sources, even as they fight with their own government. Imagine where we could be if Washington wasn’t trying to throttle the flow by holding up the Keystone XL pipeline or constantly pushing job killing bills like The FRAC Act which would restrict horizontal drilling and development of previously untenable resources.

Of course, as the study notes, no matter how much progress we make, we’re probably never going to get back to the production / consumption ratio we had in the 70’s. But that doesn’t mean that we still can’t do a lot better than we are now. In 2010 we only imported 12% of our oil from Saudi Arabia, down from 19% in 1993. And with just a little less interference from the government, we can drive that number down further still.

We’re still paying so much because oil is traded as a global commodity and the oil we produce or refine is dribbled into the global supply. It’s a scam and a shame and it won’t stop till we pull out of some treaties.

Here’s an idea. Why not create small co-ops that have little refineries. You join the co-op, and buy your gas from it. Sort of like the buying clubs of my youth, or the non-insurance Christian “share-the-cost” medical schemes. In order to join the co-op, you have to be a resident of the state where the co-op is. That way we can avoid all the Federal taxes and duties that come from interstate commerce, and can also sell the oil at cost instead of inflated futures and other scams on the international oil market.

But it’s not so much US citizens or US citizen owned companies doing the exporting, now, is it. From what I’ve read, the Obama administration, while denying US firms drilling rights, has been bending over backwards to advantage foreign owned companies in securing contracts, leases and purchase outright (including China, Russia and India) drilling contracts (on and off shore), land where such drilling will be performed and mines. So, we’re not profitting in any way from this, our resources are being diverted to Obama’s foreign friends.

NorCal Nodonk, an hour before the Oregon border. Our fuel is barged in, so we do pay more to keep the truckers off our “precious highways”. Plus Cal still has to mix in MTBE, (the stuff that says it can give you cancer and kill you right on the pumps), which adds to the cost too.

NorCal Nodonk, an hour before the Oregon border. Our fuel is barged in, so we do pay more to keep the truckers off our “precious highways”. Plus Cal still has to mix in MTBE, (the stuff that says it can give you cancer and kill you right on the pumps), which adds to the cost too.

Rovin on December 19, 2011 at 3:12 PM

It is my understanding that Cal banned MTBE as a gasoline additive in 2004 or 2005 along with 25 other states, although your point about cost is probably still valid for winter mix vs. summer mix with other additives such as ethanol.

Note that previous MTBE groundwater contamination from pre-2004 sources is still in existence at many sites in Cali.

Here’s an idea. Why not create small co-ops that have little refineries. You join the co-op, and buy your gas from it. Sort of like the buying clubs of my youth, or the non-insurance Christian “share-the-cost” medical schemes. In order to join the co-op, you have to be a resident of the state where the co-op is. That way we can avoid all the Federal taxes and duties that come from interstate commerce, and can also sell the oil at cost instead of inflated futures and other scams on the international oil market.

JoseQuinones on December 19, 2011 at 12:23 PM

It is a great idea and one that would be shot down by envirokooks immediately.